Riyadh cuts H1 bud­get deficit by 50pc

New Straits Times - - Business / World -

RIYADH: Saudi Ara­bia’s bud­get deficit halved in the first six months of this year, said the fi­nance min­istry yes­ter­day, fol­low­ing sweep­ing spend­ing cuts and a sta­bil­i­sa­tion in oil prices.

The ul­tra-con­ser­va­tive king­dom has moved to di­ver­sify its tra­di­tion­ally oil-de­pen­dent econ­omy fol­low­ing a sharp fall in crude prices.

The bud­get deficit dropped by 51 per cent to 72 bil­lion riyals (RM82.5 bil­lion) in the first half of this year, the min­istry an­nounced.

“This re­sult re­flects an im­prove­ment in the man­age­ment of pub­lic fi­nances as a re­sult of eco­nomic re­form in­tro­duced through Vi­sion 2030,” said Saad al-Shahrani, a high-rank­ing min­istry of­fi­cial.

The Vi­sion 2030 plan, an­nounced by the king­dom last year, aims to de­velop Saudi Ara­bia’s in­dus­trial and in­vest­ment base and boost small and medium busi­nesses to cre­ate lo­cal jobs and re­duce re­liance on oil rev­enue.

It is the sec­ond bud­get re­port re­leased by Riyadh since the au­thor­i­ties an­nounced in May they would be­gin is­su­ing the fig­ures on a quar­terly ba­sis to boost trans­parency.

The king­dom has reg­u­larly posted bud­get deficits since 2014, fol­low­ing a slump in oil prices.

Saudi Ara­bia, the world’s largest crude ex­porter, in De­cem­ber pro­jected a bud­get deficit of US$53 bil­lion (RM227.8 bil­lion) for this year. Rev­enues for the first half of the fis­cal year were up 29 per cent to 308 bil­lion riyals from the same pe­riod last year.

Spend­ing in the first six months dropped 2.0 per cent to 380.7 bil­lion riyals.

As part of its re­forms, Saudi Ara­bia is due to in­tro­duce val­ueadded tax (VAT) early next year along with the United Arab Emi­rates and Qatar.

Riyadh an­nounced in June it had be­gun tax­ing for­eign­ers work­ing in the pri­vate sec­tor as part of its fis­cal re­forms.

The coun­try is also pre­par­ing to sell just un­der five per cent of en­ergy gi­ant Aramco next year.

Saudi Ara­bia raised US$17.5 bil­lion in its first in­ter­na­tional bond of­fer­ing in Oc­to­ber last year. AFP

BLOOMBERG PIC

Saudi Ara­bia, through its Vi­sion 2030 plan, aims to de­velop its in­dus­trial and in­vest­ment base and boost small and medium busi­nesses to cre­ate jobs and re­duce re­liance on oil rev­enue.

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